Corporations and institutions with relative high visibility have a lot to lose when internal misconduct is exposed. If you are an institution, such as a school, prison, or government body, internal misconduct can strongly shake the public’s confidence in how that misconduct will impact the groups and communities being served. Embarrassing, pervasive issues, such as a business party culture, can really drive down faith in your brand. If you’re a large corporate chain, such as Walmart, or McDonald’s, your corporate culture is subject to criticism from current/past employees, with heavy emphasis on how that corporate culture effects both productivity and the workforce.
Just one week after ringing in the new year, McDonald’s current CEO, Chris Kempczinski, has announced that he plans to bring an end to the business party culture embroiled in their corporate atmosphere. According to The Wall Street Journal, Kempczinski, “…is seeking to restore a more professional culture at McDonald’s after what some current and former employees described as an environment influenced by his predecessor’s late-night socializing with some executives and staffers at bars and flirtations with female employees…” This business party culture was pervasive. His predecessor, Steve Eastbrook, was terminated in November of 2019 after he confessed to having a relationship with an employee. What is particularly problematic about these circumstances is that healthy corporate culture begins with leadership. When leadership behaves ethically within the organization, employees are more likely to follow that example. When executives, managers, and supervisors are not held accountable for bad behavior, it sends a message to the rest of the organization that poisons the well of corporate culture.
But inappropriate personal conduct is not the only challenge
currently facing McDonald’s culture. Strains imposed by the franchises’
renovation program has franchisees challenging their relationship with the
corporation. In addition, unions are still reeling from a decision handed down
by a national union-organizing supervision board, which states that the
corporation will no longer be liable for labor violations committed by its
franchisees. Labor advocates who made their concerns apparent to the board were
ignored, and the decision came down with a 2-1 vote. In the background,
employees continue their cause of “Fight For 15,” in reference to their desire
to have McDonald’s starting wage raised to $15 per hour.
Kempczinski’s promise to diffuse a business party culture within the corporation is a promising start—however, in order to make meaningful changes to the corporation, there needs to be a top-to-bottom evaluation of internal processes, and of the behavior exhibited by leadership—both in the public view and behind closed doors. That is why so many institutions and corporations are subjecting their internal operations to a corporate culture audit to ensure that they won’t be caught unawares about the debilitating, pervasive issues within their organization. Regardless of quality, corporate culture moves in a cycle. The actions of leadership filter down through the workforce, influencing productivity and engagement from employees. Employees either contribute positively or negatively to the corporation as a result of that leadership, and that leads directly back to leadership in a supervisory capacity. For the sake of a long-beloved American corporation, let’s hope that Kempczinski follows through on his promise for change.
How do you know when your business or organization needs a corporate culture audit? The fact of the matter is that you don’t have to be an educated risk assessment investigator to identify the signs. Many employees can trace their workplace woes back to an internal process or another employee they do not like. Sometimes it’s difficult to discern whether your organization needs a corporate culture audit. Here are 8 of the most prevalent signs that leadership should watch out for when it comes to declining corporate culture.
8. High-Pressure Environment
There is a plethora of high-pressure jobs that can create tension in the workplace, like media conglomerates, financial firms, and law offices. When stress is part of the job, many employers go the extra mile to ensure that their employees can have good work-life balance, such as paid-time-off, vacations, and comprehensive benefits. In high-pressure jobs where these things are not available to employees, the workforce regularly experiences burnout and lack of engagement. When leadership is ignorant or inattentive to these issues within their corporation, it drives corporate culture down and contributes to the overall detriment of the workplace.
Every employee has substandard days for a myriad of reasons, but when the workplace is constantly plagued by low energy and low morale, it spreads like a cancer throughout the organization. Employees who are engaged in the workplace increase productivity and customer experience. When apathy spreads throughout the workplace, it usually indicates that the root cause is pervasive, effects everyone, and needs to be neutralized as soon as possible.
If your organization is running into the same problems
quarter to quarter, this is a major red flag. The nature of the problems are insignificant—whether
it’s a problem with internal processes or multiple complaints of harassment,
the fact that the problem continues to thrive within the workplace indicates
that there is a fundamental issue with internal processes or personnel. While
each issue may have resolved initially, the root of the problem was never
identified or addressed. A healthy cycle of corporate culture cannot grow in
such an environment.
5. Poor Investments in People
When it comes to hiring and promoting employees, sometimes
leadership does not always make a sound investment in a single employee. It
happens in every business, where a new hire or promoted employee does not meet
expectations as predicted. This can bring internal operations to a screeching
halt, whether executives elect to correct this poor investment via termination
and turn-over, or to ignore the issue and allow that employee to continue
stalling the corporation’s mission.
4. Questionable Ethics
“Questionable ethics” does not mean that it’s apparent that
there is illegal or ethically unclear practices taking place within the
workplace—otherwise it would be much higher on this list. “Questionable ethics”
actually refers to individual employees’ understanding and ability to explain
their company’s values. Regardless of intent, corporations are sometimes vague
about their mission or values, using rosy words that denote a company with
integrity and passion for bringing their products and consumers together. This
can make it difficult for employees to intellectualize company goals and
vision. When the workforce does not have a clear, common goal to achieve as a
whole, employees can easily become detached and apathetic.
3. Lack of Accountability
When corporate culture is healthy, there is a mindful unity throughout the workforce, in which individual employees are content, engaged, and working towards the same goal. When the corporate culture is poor, individual employees at all levels refuse to take responsibility when something goes wrong. Lack of accountability for a mistake or oversight leads to a great deal of finger-pointing and shrugging in meetings and over email, and slows down the wheels of progress within a corporation or organization.
2. Bad Behavior in Leadership
Corporate culture audits can catch some of the most elusive culprits of tainting corporate culture: Executives and leadership. The old adage goes, “The fish stinks from the head,” meaning that most distasteful things within a company or organization can be traced back to leadership. Whether it is a supervising manager or an executive, bad behavior on behalf of leadership always trickles down into the rest of the workforce, because the supposition is, “If the boss is doing this, it must be okay.” This applies to all levels of bad behavior, from theft to malingering and everything in between.
1. Lack of Diversity
The number one indicator that your company or organization
might need a corporate culture audit is a lack of diversity in the workforce.
Any corporate culture that is homogenized with regards to race, gender
identity, sexual orientation, or even age lacks the inherent ability to grow
and change. Leadership in the workplace—management and executive positions—are
dominated by cisgender, straight, white men, who are statistically projected to
hire other individuals who are also in this category. Individuals in this
category are hired, mentored, and promoted more than others, which feeds into a
cycle of stagnation that will ultimately disbenefit the company or
organization. The value of diversity comes with the support of trusted
employees from many walks of life—employees who have had different life
experiences and have a perspective that can reinvigorate an organization’s
vision or mission—ensuring that the pursuits of the workplace are growing and
changing along with the rest of the economy.
The #MeToo movement has fundamentally changed the conversation around reporting and documenting allegations of sexual harassment in the workplace. Victims of this harassment have previously been restricted by a pervasive culture of silence and shame within the workplace—a culture where reporters are vilified and characterized as dishonest people with an axe to grind. Now, with many victims of sexual harassment publicizing their experiences in the workplace, more and more people are feeling empowered to seek justice for their treatment.
The Equal Opportunity Commission (EEOC) reported in their annual fiscal report that sexual harassment filings had an overall increase of 13.6% from 2018. The EEOC also denoted that they secured nearly $70 million for the victims of sexual harassment through enforcement on behalf of administration. These are just a few ways that the EEOC is attempting to make themselves the new champions of workplace harassment reporting in effort to improve the culture around reporting and enforcement. The EEOC seeks to empower employers to create a corporate culture within their organization that does not demonize reporting and encourages thorough investigations of all claims. By fostering this open and transparent workplace culture, employers create spaces for their employees that are safe, respectful, and thriving environment.
For a myriad of reasons, employers may have difficulty in
performing due-diligence on sexual harassment claims. Whether the employer does
not find the complaint credible, or as a result of oversight, when no
investigation is conducted into the complaint, the organization opens itself up
to subsequent litigation and a public relations nightmare. However, there are
affirmative defenses for employers who can document their attempts to create a
safe environment for their employees. One of the ways employers can document
this is by submitting their organization to a corporate culture audit.
A corporate culture audit is one of the best investments that an employer can make in 2019. These audits are typically conducted by independent risk assessment firms and in some cases, even private investigators. In essence, a corporate culture audit is basically a check-up for a business or organization—not unlike taking your car in for scheduled maintenance. An auditor will enter the work environment and conduct a series of assessments based on a previously-set agenda. The goal of the auditor is to review internal processes and the physical location (if applicable) and identify issues that could have negative consequences for the corporation or organization, such as faulty investigation procedures for internal complaints.
Not only can these audits protect businesses and organizations
in the aftermath of a sexual harassment claim, but corporate culture audits can
also improve your business from within. What we know about the cycle of
corporate culture indicates that when employees feel valued, they are more
engaged and more productive as a result. The audit also evaluates the
organization’s internal operations for efficacy and efficiency. By identifying
flaws within internal operations, corporations can modify those procedures to increase
productivity. Corporate culture audits are an invaluable opportunity for
organizations to bolster their business and improve the overall health of the
If you want to give your business a tune-up, call Lauth
Investigations International today for a free quote on our corporate culture
program. We are an independent private investigation firm specializing in corporate
investigations and crimes against persons. We have an A+ rating with the Better
Business Bureau and scores of 5-star ratings on Google. Call today and learn
how we can improve your business from within.
Every corporation needs an excellent in-house attorney to fight complex legal battles in their stead—someone to act in the best interests of the company and its future. In addition to the everyday intricacies of business litigation, house counsel may also have to field lawsuits from current or former employees who have a legal objection to something that happened during their tenure at the business. When employee lawsuits become a pervasive issue at a business, not only is the cost in billable hours exponential, but the legal judgements that result from these litigations can be devastating for companies. While litigation in general can be characterized as the cost of doing business, companies with healthy corporate culture experience a much lower rate of employee lawsuits. So, how can healthy corporate culture reduce the chance of a lawsuit?
Corporations across the United States are starting to understand the value of healthy corporate culture. Employee lawsuits aside, unhealthy corporate culture can have detrimental, snowballing effects that occur when employees are unhappy in their capacity and unengaged in their work. This is why corporations must improve their culture from within, so that employee retention and productivity remain high. Corporations also have millennials making up the majority of the workforce in the nation, complete with a set of values that propels them to seek a better work-life balance. This means that millennials are less likely to stay in a job where they are unhappy, and will simply seek a more amendable opportunity that allows them to have the work-life balance they desire.
When employees do not feel heard or valued by their employer, they’re far more likely to file a lawsuit related to their grievance. And unfortunately, no company is safe. In 2010, 99,922 EEOC charges were filed in the state of Florida alone, a datapoint that makes leadership wonder not if they’ll be the target of a lawsuit, but when. Employee lawsuits can drag out over months or even years, exponentially getting more expensive. The average settlement in an employee claim or lawsuit is $40,000. That expense alone can be devastating to a company, but that does not account for the disruption to daily operations, and the fact that litigation costs are on a steady rise. In 10% of cases, settlements result in $1 million or greater, a sum that could be the beginning of the end for many medium to small corporations.
The risk of a lawsuit can be even greater depending on the state in which it is filed. According to the Hiscox Group, a majority of states carry around a 10% change of having an employee lawsuit filed against them. However, in Georgia, the probability is 19%. In states like New Mexico, California, and Nevada, the probability can be as high as 55%. The area with the highest probability of litigation is the District of Columbia, with a terrifying 81% chance. The reason for the wide range in probabilities is two-fold: First, the legal standards in each state regarding discrimination and hostile work environments can vary. Secondly, the states with higher risks have more binding laws regarding litigation that can create extra hurdles for companies at the state level. This is why corporations must stay current on employment legislation, especially if they have locations across multiple states/jurisdictions.
So, how can corporations protect themselves against litigation from current or former employees? In-house counsel fields lawsuits when they are filed, but did you know there was a more proactive method to combatting employee litigation? The answer is simple: healthy corporate culture. When a corporation has a healthy corporate culture, it means that the employees feel valued by their employers in their capacity within the organization. It means that employees who feel valued are engaged, thereby greasing the wheels of internal, daily operations. This increased productivity means progress for the company, and the cycle of healthy corporate culture begins anew with leadership rewarding engaged employees for their hard work.
Research shows that the number one reason behind employee lawsuits is retaliation. In an average scenario, the employee reports an internal issue, usually regarding a form of discrimination. Following the inclusion of the investigation, when the employee cannot track for upward mobility, or a form of unwarranted disciplinary action occurs, they assume the reason is for reporting the previous issue. This can result in that employee filing a lawsuit for receiving unfair treatment on behalf of their employer. When organizations have healthy corporate culture, this is far less likely to occur.
If your company or organization needs a corporate culture overhaul, call Lauth Investigations International today for a free quote on our corporate culture audit program. We can help you improve your business from within and decrease the likelihood of employee lawsuits. When it comes to your business, you should expect facts, not fiction.